Cetera CEO Antoniades enthusiastic about Securian pickup

Almost two years after its purchase of Voya Financial Advisors, Cetera Financial Group is buying another insurance company owned broker-dealer. Cetera announced last month it was buying the wealth business of insurer Securian Financial Group, which includes more than 1,000 advisors who oversee $24.8 billion in assets under management and $47.4 billion in assets under administration.

Cetera Financial CEO Adam Antoniades couldn't sound more pleased about the latest acquisition, the terms of which were not disclosed.

"Securian has a really strong culture, and there's tremendous value delivered by its ownership structure, which consists of more than 30 managing partner businesses," Antoniades said this month in an interview. "This is a group that’s going to be primed for growth."

Broker-dealer acquisitions always create opportunities for competitors to attempt to recruit financial advisors, and Cetera's deal with Securian is no different, said Casey Knight, executive vice president of ESP Financial Search.

"Securian advisors are very productive, and LPL Financial is likely to go very hard after them. And Cetera is going to do everything it can to prevent that," Knight said. "It's always an opportunity to recruit during an acquisition, and LPL is good at that."

It wouldn't be the first time LPL and Cetera faced off over recruiting advisors in the middle of a deal. Back in 2021, the two firms duked it out over the 900 or so advisors from Voya.

Antoniades noted that the average production per advisor, meaning total annual fees and commissions, was in the range of $650,000 at Securian, which is more than double the figure at LPL Financial. Securian is also known for a new entrants' program for financial advisors, with 70% or more of its advisors joining the firm through that program. Securian's broker-dealer revenue is in the neighborhood of $500 million annually, he said.

Cetera has wanted to buy a trust company for some time, Antoniades said, and it also acquired the equity in Securian Trust Co. as part of the deal.

"The secret to an acquisition is do no harm, first, and then take Cetera's capabilities and overlay them to add value. We can do that with insurance companies," Antoniades said, naming a variety of insurance companies whose broker-dealers it has purchased over the years, including two from MetLife Inc. in 2013 and more recently Voya.

Many insurance companies have dumped their independent broker-dealers over the past 15 years due to the high risks and costs associated with the retail securities industry, along with increasing limitations on sales of proprietary products like variable annuities.

"We are hiring all their employees," Antoniades said.

A giant network of broker-dealers $320 billion in client assets, Cetera has been active in the deal making and registered investment advisor acquisition business. This week, for example, it said it was taking a minority stake in a firm already affiliated with it, Prosperity Advisors, a firm in the Kansas City area with $1.7 billion in client assets. Terms of that deal were not disclosed.

In 2018, private equity manager Genstar Capital bought Cetera Financial Group, now with 8,000 brokers and financial advisors. The common wisdom about such deals involving private equity managers is that a five- to seven-year window exists before the manager cashes out and commences another transaction.

Not so for Cetera.

"There are no plans to go public," Antoniades said. "We just got done with our five-year strategic plan, and we've already created tremendous value for our shareholders. I'm equally excited — if not more so — for the next five years."